Submitted by: http://mortgage-broker.kelowna-bc.ca
We all know that Kelowna home ownership is a pretty good investment over a long period of time, however paying the mortgage is not always the easiest thing to do. Usually a mortgage is anywhere from a fourth to a half of the amount of money you bring home every month! After you pay utilities and expenses, that doesn’t leave a whole lot of room to spare. Canadians are often wary of paying extra on their mortgage because they no longer have access to that money once they put it toward their house, but those who are living in Australia have a really peculiar law which is quite beneficial for them.
If you live in Australia, you have a really neat savings option because of Australian law. It’s called an “offset account,” and it’s very worthwhile if you or someone you know has the opportunity to use it. Basically it’s a savings or a checking account which is linked to your mortgage..
This might not seem very beneficial to your financial life when looking at it on face, however there are a number of benefits that occur when we look at the math. Instead of the amount of interest you pay being calculated on the total amount of the mortgage, you only pay on the interest between the difference in the savings account and the mortgage. If you had a $100,000 mortgage and $20,000 in your offset account, you would only be paying interest on $80,000! That’s a pretty good deal! Depending on the type of Kelowna mortgage broker you have, you can pretty easily cut the amount of time it takes to repay your mortgage nearly in half.
It gets better. Not only do you get to skip out on some of your interest on your mortgage, all the money made in those savings account are not taxed as interest incomes as opposed to regular savings account! This would be pretty much a guaranteed way to get 10% return on your money, which is done practically nowhere! This type of account would be great to save for emergencies, and for the bulk of your other savings because you get such a great rate of return.
This option would be very beneficial for Kelowna mortgage holders, so if you’re in Kelowna BC, you might want to consider writing a letter to your MLA and telling them that this would be a pretty good idea! It might not happen, but it’s worth a shot!